I WANT TO THANK CHAIRMAN DREIER, RANKING MEMBER MOAKLEY AND THE REST OF THE COMMITTEE FOR HOLDING THIS HEARING TODAY. TO OUR COMMITTEE, THERE IS NO MORE IMPORTANT ISSUE THAN PRESERVING THE INTEGRITY OF OUR TRANSPORTATION TRUST FUNDS.

THE IMPORTANCE OF THE POINT OF ORDER UNDER DISCUSSION TODAY IS SIMPLE – IT IS WHAT ENSURES THAT TEA 21 IS CARRIED OUT SO THAT HIGHWAY TRUST FUND TAXES ARE USED FOR THEIR INTENDED PURPOSE.

 

TEA 21 ENDED NEARLY THREE DECADES OF ABUSE OF THE HIGHWAY TRUST FUND. SINCE ITS INCORPORATION INTO THE UNIFIED BUDGET IN 1969, THE HIGHWAY TRUST FUND HAD BEEN BORROWED FROM TO MASK OR FINANCE OTHER GENERAL FUND SPENDING.

 

THIS WAS A FRAUD AND WRONG.

 

OUR COMMITTEE WENT THROUGH A THREE-YEAR EFFORT TO END THIS SHAMEFUL PACTICE AND RESTORE INTEGRITY INTO THE HIGHWAY TRUST FUND, WHICH CULMINATED IN THE PASSAGE OF TEA 21. THAT LAW IS NOW IN PLACE AND WORKING WELL, AND ITS LYNCHPIN IS THE POINT OF ORDER.

 

TO PUT THIS ISSUE IN CONTEXT, LET ME FIRST LAY OUT SOME OF THE HISTORY OF THE ABUSE OF THE HIGHWAY TRUST FUND. NEXT, I WILL DISCUSS THE PROCESS THAT LED TO THE PASSAGE OF TEA 21. FINALLY, I WILL BRIEFLY DESCRIBE OUR VIEW OF ITS IMPLEMENTATION.

 

THE PROBLEM

 

HIGHWAY TRUST FUND ESTABLISHED BY PRESIDENT EISENHOWER IN 1956

• DEDICATED USER FEES (FUEL AND VEHICLE TAXES)
• DEFICIT PROOF
• CAN ONLY BE USED FOR TRANSPORTATION INFRASTRUCTURE
• MADE PART OF UNIFIED BUDGET IN 1969 TO FINANCE VIETNAM WAR

   

HISTORY OF HIGHWAY FUNDING – SINCE1969, THE APPROPRIATIONS PROCESS MEANT THAT TRUST FUND TAXES WERE USED FOR OTHER PURPOSES (OFFSETTING DEFICIT OR MASKING OTHER SPENDING).

 

APPROPRIATIONS COMMITTEE WOULD MASK THIS PRACTICE BY INCREASING HIGHWAY FUNDING JUST BEFORE AUTHORIZATIONS, AND LOWERING THEM AFTER THE AUTHORIZATION WAS COMPLETE.

CREATED HUGE UNSPENT CASH BALANCE IN HIGHWAY TRUST FUND. IT HAD REACHED $20 BILLION IN 1997 AND WAS PROJECTED TO INCREASE TO $150 BILLION BY 2008 IF NOTHING CHANGED.

IN 1995, COMMITTEE INTRODUCED A BILL TO TAKE 4 TRUST FUNDS – THE HIGHWAY, AVIATION, HARBOR MAINTENANCE AND INLAND WATERWAYS TRUST FUNDS -- OFF-BUDGET. IN MAY, 1996 VOTE, THAT BILL PASSED HOUSE BY THE OVERWHELMING BI-PARTISAN MARGIN OF 284-143.

• OUR PURPOSE WAS TO ENSURE THAT TRUST FUND TAX REVENUES WERE BEING USED FOR THEIR INTENDED PURPOSES
• OFF-BUDGET WAS ONE WAY TO DO IT – BY TAKING THE TRUST FUNDS OUT OF THE UNIFIED BUDGET, THE INCENTIVE OF APPROPRIATIONS PROCESS TO ARTIFICIALLY HOLD DOWN GAS TAX SPENDING TO ALLOW SPENDING FOR OTHER PURPOSES WOULD BE TAKEN AWAY.
• OUR COMMITTEE WAS ALWAYS OPEN TO ANY OTHER WAY TO ENSURE THAT TAX REVENUES IN THE HIGHWAY TRUST FUND WERE SPENT.

   

IN RECENT YEARS, THE NEED TO TAKE THE HIGHWAY TRUST FUND OFF BUDGET WAS FURTHER HIGHLIGHTED BY SEVERAL CONGRESSIONAL AND ADMINISTRATION EFFORTS TO USE BUDGETARY GIMMICKS AND ARCANE PORTIONS OF THE BUDGET PROCESS TO REDUCE HIGHWAY AND TRANSIT SPENDING.

THE EXISTING HIGHWAY AUTHORIZATION LAW, ISTEA, EXPIRED ON SEPTEMBER 30, 1997. MY PRIMARY GOAL DURING REAUTHORIZATION OF ISTEA WAS TO END THE ABUSE AND ENSURE THAT HIGHWAY TRUST FUND TAX REVENUES WERE SPENT ON HIGHWAY AND TRANSIT INFRASTRUCTURE.

 

THE 1997 BALANCED BUDGET AGREEMENT WAS REACHED IN MAY, 1997. THAT AGREEMENT HELD HIGHWAY AND TRANSIT SPENDING $12 BILLION BELOW TAX REVENUES DURING THE PERIOD FY1998-2002. THE BUDGET WAS BEING BALANCED IN PART USING HIGHWAY TRUST FUND TAXES. THIS WAS INTOLERABLE.

 

WHEN THE BUDGET RESOLUTION IMPLEMENTING THE BALANCED BUDGET AGREEMENT CAME TO THE HOUSE FLOOR, CONGRESSMAN OBERSTAR AND I OFFERED A SUBSTITUTE BUDGET RESOLUTION THAT INCREASED SPENDING LEVELS OUT OF THE HIGHWAY TRUST FUND BY $13 BILLION OVER 5 YEARS. IT WAS PAID FOR BY A 1/3RD OF 1 PERCENT ACROSS-THE-BOARD CUT IN SPENDING AND TAX RELIEF.

 

OUR SUBSTITUTE BUDGET RESOLUTION FAILED BY ONLY TWO VOTES IN BOTH THE HOUSE AND THE SENATE, AND ONLY AFTER INTENSE LEADERSHIP AND ADMINISTRATION LOBBYING AGAINST IT.

 

EFFORTS TO REAUTHORIZE ISTEA ENDED IN 1997 BECAUSE I WAS UNWILLING TO REPORT A MULTI-YEAR REAUTHORIZATION THAT DID NOT ENSURE THAT HIGHWAY TRUST FUND TAX REVENUES WERE SPENT. A SIX-MONTH EXTENSION WAS PASSED IN OCTOBER, 1997.

BEGINNING IN JANUARY, 1998, THE SPEAKER CONVENED A TASK FORCE TO DETERMINE THE PROPER TREATMENT OF THE HIGHWAY TRUST FUND IN THE CONTEXT OF THE OVERALL BUDGET.

THE PURPOSE OF THE TASK FORCE WAS TO REACH A UNIFIED REPUBLICAN POSITION

ALL THE RELEVANT HOUSE MEMBERS WERE INCLUDED.

• REPUBLICAN LEADERSHIP,
• MYSELF AND SUBCOMMITTEE CHAIRMAN PETRI,
• BUDGET COMMITTEE CHAIRMAN KASICH,
• APPROPRIATIONS COMMITTEE CHAIRMAN LIVINGSTON AND SUBCOMMITTEE CHAIRMAN WOLF,
• WAYS AND MEANS COMMITTEE CHAIRMAN ARCHER,
• RULES COMMITTEE CHAIRMAN SOLOMON,
• REPUBLICAN CONFERENCE CHAIRMAN BOEHNER,
• OTHER MEMBERS AND ALL RELEVANT STAFF

   

ALL PRIORITIES AND CONCERNS WERE DISCUSSED:

• OUR COMMITTEE'S TOP CONCERN WAS REFORMING THE TRUST FUND TO ENSURE THAT GAS TAX REVENUES WERE SPENT, HOWEVER THAT COULD BE ACCOMPLISHED.
• THE APPROPRIATIONS COMMITTEE'S CONCERN WAS THAT THEY CONTINUE TO BE A PART OF THE ANNUAL OVERSIGHT AND DECISIONMAKING PROCESS WITH RESPECT TO THE HIGHWAY AND TRANSIT PROGRAMS
• THE BUDGET COMMITTEE'S TOP PRIORITIES WERE PRESERVING THE INTEGRITY OF THE BUDGET PROCESS AND THE SPENDING LEVELS IN THEBUDGET AGREEMENT.

   

AFTER SEVERAL MONTHS OF MEETINGS, SPEAKER GINGRICH DETERMINED SEVERAL PRINCIPLES THAT WERE TO GUIDE HOUSE CONSIDERATION OF THE HIGHWAY TRUST FUND. THE RELEVANT OF THESE WERE:

• THE GAS TAX IS INVIOLATE
• THE BILL WOULD ENSURE THAT TAX REVENUES PAID INTO THE HIGHWAY TRUST FUND WOULD BE SPENT.
• THE HOUSE WOULD TAKE THE HIGHWAY TRUST FUND OFF-BUDGET, BUT WOULD FALL BACK TO FIREWALLS IN CONFERENCE
• ANY SPENDING OVER BASELINE TO ACCOMPLISH THESE GOALS WOULD HAVE TO BE FULLY OFFSET

AS I HAVE SAID, OUR COMMITTEE'S SUGGESTION ON HOW TO ACCOMPLISH THESE PRINCIPLES WAS TO TAKE THE TRUST FUND OFF BUDGET. THIS APPROACH WAS REJECTED.

 

FIREWALLS WERE THE SUGGESTION OF THE APPROPRIATIONS COMMITTEE. THEY OPPOSED TAKING THE TRUST FUNDS OFF BUDGET OR CREATING ANY ADDITIONAL MANDATORY SPENDING. THEY PREFERRED FIREWALLS SINCE THE FIREWALLS WOULD RESERVE OUTLAYS FOR THE HIGHWAY AND TRANSIT PROGRAM, BUT WOULD KEEP THESE PROGRAMS AS DISCRETIONARY SPENDING AND A PART OF THE ANNUAL BUDGET AND APPROPRIATIONS PROCESSES.

OUR COMMITTEE WAS CONCERNED THAT FIREWALLS THEMSELVES WOULD NOT ENSURE THAT THE TAX REVENUES WERE SPENT: WHILE THE FIREWALLED SPENDING WAS SET ASIDE, THERE WAS NO MECHANISM TO ENSURE THAT THE APPROPRIATIONS COMMITTEE WOULD ACTUALLY APPROPRIATE THOSE LEVELS SINCE THEY WERE PART OF OVERALL DISCRETIONARY SPENDING.

 

THE SPEAKER LISTENED TO OUR CONCERN AND DIRECTED THAT THE OFFSET SPENDING LEVELS FOR HIGHWAYS AND TRANSIT NEEDED TO BE GUARANTEED – THE PURPOSE OF THE POINT OF ORDER.

 

THE SPEAKER'S DIRECTIVE WAS MADE IN A LARGE MEETING ATTENDED BY AT LEAST 20 MEMBERS AND 50 STAFF.

 

DURING THE CONFERENCE WITH THE SENATE ON TEA21, THERE WERE MANY PROPOSALS FOR HOW TO IMPLEMENT SPEAKER GINGRICH'S PRINCIPLES, PARTICULARLY THE FIREWALLS.

OUR COMMITTEE'S PRIORITY REMAINED THE SAME – REFORMING THE PROCESS TO ENSURE THAT THE HIGHWAY TRUST FUND WOULD NOT BE ABUSED AND THAT ITS TAXES WOULD BE USED FOR THEIR INTENDED PURPOSE.

 

DURING THE FINAL NEGOTIATIONS, OUR COMMITTEE MADE THREE KEY CONCESSIONS THAT MADE THE POINT OF ORDER NECESSARY.

 

FIRST, WE ULTIMATELY AGREED TO KEEP HIGHWAY TRUST FUND PROGRAMS ON THE DISCRETIONARY SIDE OF THE BUDGET LEDGER.

 

OUR PREFERENCE WAS THAT THE INCREASED SPENDING NECESSARY TO ENSURE THAT TAX REVENUES WERE SPENT WOULD BE MADE MANDATORY. THIS WOULD MAKE THEM "GUARANTEED" (WITH NO NEED FOR A POINT OF ORDER). THIS APPROACH WAS OBJECTED TO BY THE HOUSE AND SENATE BUDGET COMMITTEES, WHICH OPPOSED ANY NEW MANDATORY SPENDING. IF THE SPENDING HAD TO BE DISCRETIONARY, A POINT OF ORDER IN THE HOUSE WAS THE ONLY WAY TO ACCOMPLISH A GUARANTEE.

 

SECOND, WE AGREED TO LEVELS OF OVERALL SPENDING THAT WERE LOWER THAN SPENDING TAX RECEIPTS EACH YEAR. EACH YEAR, OBLIGATIONS (RATHER THAN OUTLAYS) WOULD BE EQUAL TO THE PRIOR YEAR'S ACTUAL TAX RECEIPTS. THIS AMOUNT WAS FULLY OFFSET.

 

THIRD, WE AGREED THAT IN RETURN FOR ENSURING THAT THE TRUST FUND WOULD NOT BE BORROWED FROM IN THE FUTURE, WE NO LONGER CREDITED THE TRUST FUND WITH INTEREST AND ELIMINATED MOST OF THE CASH BALANCE.

 

CONTRARY TO SOME ASSERTIONS, THE POINT OF ORDER WAS NOT ADDED IN THE DEAD OF NIGHT. IT WAS PART OF A PAINSTAKINGLY NEGOTIATED COMPROMISE IN A PROCESS THAT INCLUDED EVERYONE INVITED TO THIS HEARING TODAY.

IN SUM, WHILE THE PROCESS TO GET TO THE POINT OF ORDER WAS LONG AND COMPLEX, THE PRINCIPLE BEHIND THE POINT OF ORDER IS SIMPLE. TEA 21 REFORMED THE HIGHWAY TRUST FUND AND ENSURED THAT TAX RECEIPTS WOULD BE SPENT. ANY ADDITIONAL SPENDING THAT THIS PRINCIPLE CREATED WAS FULLY OFFSET. THE POINT OF ORDER WAS ADDED TO ENSURE THAT THESE PROMISES WOULD BE KEPT.

 

WITHOUT THE POINT OF ORDER, WE WOULD BE RIGHT BACK BATTLING OVER EFFORTS TO RAID THE TRUST FUND FOR OTHER PURPOSES.

IN GENERAL, THE POINT OF ORDER IS WORKING WELL.

 

IT AMENDED RULE 21, CLAUSE 3 OF THE RULES OF THE HOUSE TO PROVIDE:

IT'S OPERATION IS SIMPLE. SECTION 8103 OF TEA 21 CONTAINS A LEVEL OF OUTLAYS FOR EACH YEAR THAT ESTIMATED TO BE EQUAL TO THE PRIOR YEAR'S TAX RECEIPTS. THOSE LEVELS ARE ADJUSTED TO ACCOUNT FOR ACTUAL CHANGES TO TAX RECEIPTS. ANY LEGISLATIVE ACTION THAT DOES NOT ENSURE THAT THOSE LEVELS CAN BE OBLIGATED IS SUBJECT TO A POINT OF ORDER.

THE OVERALL TEA 21 LEVELS ARE EASY TO IDENTIFY AND CALCULATE. THE APPROPRIATIONS COMMITTEE HAS BEEN ABLE TO REPORT BILLS AT THESE LEVELS FOR THE PAST TWO YEARS.

 

MUCH TIME AND EFFORT HAS BEEN EXPENDED LOOKING AT ONE SMALL PART, WHETHER AMENDMENTS MAY BE OFFERED THAT LIMIT PARTICULAR HIGHWAY OR TRANSIT PROJECTS. IT HAS BEEN ASSERTED THAT THEY MAY NOT.

 

THIS IS UNTRUE. ANY MEMBER MAY OFFER ANY AMENDMENT AS LONG AS TOTAL OBLIGATIONS DO NOT FALL BELOW PRIOR YEAR TAX RECEIPTS. THERE ARE LOTS OF WAYS TO DO THIS WHICH I WOULD BE HAPPY TO EXPLAIN LATER.

 

IN ANY EVENT, THE TYPES OF PROJECTS THAT THIS ISSUE AFFECTS REPRESENTS LESS THAN 5 PERCENT OF THE OVERALL HIGHWAY AND TRANSIT PROGRAMS.

 

THIS IS THE EQUIVALENT OF THE FLEA WAGGING THE TAIL WAGGING THE DOG

 

ANY PROBLEMS THAT HAVE CROPPED UP ARE EXTREME EXAMPLES, AND WE STAND READY TO WORK WITH ALL OF THE PARTIES HERE TO WORK THEM OUT.

I WANT TO THANK THE CHAIRMAN, RANKING MEMBER AND THIS COMMITTEE FOR ITS INTEREST IN THIS MATTER. I HAVE NO HIGHER PRIORITY THAN ENSURING THE INTEGRITY OF THE TRANSPORTATION TRUST FUNDS, AND THIS POINT OF ORDER IS THE CRITICAL STEP IN KEEPING THAT PROMISE.